Minimum alcohol price of 45p per unit could transfer £700 million from drinkers to firms

A grouping of opposition Members of the Scottish Parliament recently removed plans for a minimum price of 45p per unit of alcohol from the Alcohol Bill currently in front of the Scottish Parliament, though the SNP minority Government is still in favour of the measure. IFS researchers estimate that if a policy like this were rolled out across Britain it could transfer £700 million from alcohol consumers to retailers and manufacturers. This contrasts to increases in alcohol taxes, which largely result in transfers to government in the form of much needed tax revenue. In the long-term, it would be desirable to restructure alcohol taxes so that they were based on alcohol strength, thus allowing the tax system to mimic the impact of a minimum price but ensuring the additional revenues went to the Government rather than firms.

These are among the findings of new research published today by the Institute for Fiscal Studies, funded by the ESRC Centre for the Microeconomic Analysis of Public Policy at IFS. Using data on off-license alcohol purchases of a large number of households in 2007, the authors estimate the impact of a 45p per unit minimum alcohol price introduced across Great Britain.